RNS Number:0799B
Commoditrade Inc.
06 April 2006
Not for release, publication or distribution in whole or in part in or into the
United States, Canada, Japan, Australia, the Republic of Ireland or the Republic
of South Africa
6 April 2006
Commoditrade Inc.
("Commoditrade" or "the Company")
Proposed acquisition of the Tambelan Interest
Proposed placing of 144,000,000 Ordinary Shares at 12.5 pence per share
Application for admission and re-admission to trading on the AIM market
The Board is pleased to announce that it has today conditionally agreed to
acquire Tambelan Company Limited's interest in its contract with Sucden (UK)
Limited, a UK based commodities trading firm ("the Brokerage"), in respect of
metals trading by the Brokerage's LME Trading Team on the London Metal Exchange.
Certain definitions apply throughout this announcement and your attention is
drawn to the table at the end of this announcement where these definitions are
set out in full.
Highlights
*Commoditrade has agreed to acquire Tambelan's interest in its contract
with the Brokerage for an initial aggregate consideration of #24.4 million,
to be satisfied as to the payment of #14 million in cash and by the issue of
83.4 million new ordinary shares of 12.5p each. In addition, 6 million
deferred consideration shares may be issued on the achievement of certain
performance criteria.
*The acquisition will allow Commoditrade to receive 75 per cent. of the
trading profits (after certain expenses) attributable to the LME Trading
Team.
*Gross profits attributable to the Tambelan Agreement have grown over the
last three years to #7.1 million in the year ended 31 December 2005.
*The LME Trading Team is well established and successful, with an in-depth
knowledge of the markets on which it is represented and has developed strong
client and market relationships.
*Proposed Non-Executive Board appointments - Christopher Adams who is the
head LME trader at the Brokerage and Geoffrey Conway-Henderson who has over
35 years' experience in the finance industry, dealing primarily in
derivatives, interest rate swaps and options.
*Placing of 144,000,000 new Ordinary Shares with institutional investors
at 12.5 pence per share. to satisfy the cash consideration in respect of the
Acquisition, and to provide working capital for the Enlarged Group. The
Placing is expected to raise #18 million gross (approximately #15.2 million
net of expenses).
In view of its size, the Acquisition constitutes a reverse takeover under the
AIM Rules, and is conditional, inter alia, upon the approval of Shareholders at
an Extraordinary General Meeting to be held on 24 April 2006.
A copy of the Admission Document to be sent to Shareholders today is available
at www.commoditrade.net
Commenting, Graham Butt, Chairman of Commoditrade said:
"This is a transforming acquisition for Commoditrade which immediately brings
the Company a profitable income stream. The LME trading team has built a very
successful track record in the metals market and we believe that the demand for
metals is expected to remain strong."
Commenting, Michael Overlander, Chief Executive Officer, Sucden (UK) Limited,
said:
"Having had a mutually successful relationship with Tambelan over the past five
years, we are pleased to be continuing this with Commoditrade. We believe this
presents Sucden UK with a real opportunity to further expand our LME business
and trading team in line with our aspirations across the metals markets."
Enquiries:
Commoditrade Inc.
John Bick
Tel: 020 7451 9800
Tel: 07917 649362
Strand Partners
James Harris/Angela Peace
Tel: 020 7409 3494
W. H. Ireland
Tim Cofman-Nicoresti
Tel: 0121 665 4615
This summary should be read in conjunction with the full text of this
announcement set out below.
Strand Partners Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting as nominated adviser to the
Company in connection with the proposed admission of the Enlarged Share Capital
to trading on AIM. Its responsibilities as the Company's nominated adviser under
the AIM Rules are owed solely to the London Stock Exchange and are not owed to
the Company or to any Director or to any other person in respect of his decision
to acquire shares in the Company in reliance on any part of this announcement.
W.H. Ireland Limited, which is authorised and regulated in the United Kingdom by
the Financial Services Authority and is a member of the London Stock Exchange,
is acting as broker to the Company in connection with the Placing and proposed
admission of the Enlarged Share Capital to trading on AIM. Strand Partners
Limited and W.H. Ireland Limited are not acting for anyone else and will not be
responsible to anyone other than the Company for providing the protections
afforded to their clients or for providing advice in relation to the contents of
this announcement or the Placing or the Admission of the Enlarged Share Capital
to trading on AIM. No representation or warranty, express or implied, is made by
either Strand Partners Limited or W.H. Ireland Limited as to the contents of
this announcement, without limiting the statutory rights of any person to whom
this announcement is issued. Neither Strand Partners Limited nor W.H. Ireland
Limited will be offering advice, nor will they otherwise be responsible for
providing customer protections to recipients of this announcement or for
advising them on the contents of this announcement or any other matter. The
information contained in this announcement is not intended to inform or be
relied upon by any subsequent purchasers of Ordinary Shares (whether on or off
exchange) and accordingly no duty of care is accepted in relation to them.
Strand Partners Limited has approved the contents of this announcement solely
for the purpose of section 21 of the Financial Services and Markets Act 2000.
The principal place of business of Strand Partners Limited is 26 Mount Row,
London W1K 3SQ.
The Directors and Proposed Directors accept responsibility for the information
contained in this announcement. Subject as aforesaid, to the best of the
knowledge and belief of the Directors and Proposed Directors (who have taken all
reasonable care to ensure that such is the case), such information is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
This announcement does not constitute, or form part of, an offer or an
invitation to purchase any securities.
Not for release, publication or distribution in whole or in part in or into the
United States, Canada, Japan, Australia, the Republic of Ireland or the Republic
of South Africa
Commoditrade Inc.
("Commoditrade" or "the Company")
Proposed acquisition of the Tambelan Interest
Proposed placing by of 144,000,000 Ordinary Shares at 12.5 pence per share
Application for admission and re-admission to trading on the AIM market
1. INTRODUCTION
On 12 July 2005, Commoditrade announced that it had entered into heads of
agreement and a period of exclusivity to acquire a UK-based company engaged in
the brokerage of commodities and derivatives. On 31 October 2005, a further
announcement was made by the Company that negotiations in relation to the
acquisition of the Brokerage were at an advanced stage. On 16 January 2006, the
Company confirmed that negotiations to acquire the Brokerage were progressing
and that, in addition, it had been granted an option by Tambelan to acquire
Tambelan's interest in its contract with the Brokerage in respect of metals
trading by the LME Trading Team on the London Metal Exchange.
The Board has made significant progress in respect of the proposed acquisition
of the Brokerage and, whilst it still believes that the Brokerage represents a
viable acquisition opportunity, it has decided to terminate discussions in this
regard in order to pursue the proposed acquisition of the Tambelan Interest
which the Directors believe will create greater value for Shareholders. The
Brokerage is regulated by the FSA and as such, an application for change of
controller had been submitted to the FSA which, as a result of the termination
of discussions has now been withdrawn.
Accordingly, the Board is pleased to announce today that the Company has
exercised its option to acquire the Tambelan Interest for an initial aggregate
consideration of #24.4 million, to be satisfied as to the payment of #14 million
in cash and by the issue of the Consideration Shares. In addition, the Deferred
Consideration Shares may be issued on the achievement of certain performance
criteria.
The Directors and Proposed Directors believe that the Acquisition represents a
substantial investment opportunity which will allow Commoditrade to receive the
benefit of the revenue stream generated by the LME Trading Team pursuant to the
Tambelan Agreement and which will deliver enhancement of Shareholder value. The
LME Trading Team is well established and successful, with an in-depth knowledge
of the markets on which it is represented and has developed strong client and
market relationships. This has resulted in the achievement of strong growth in
the level of profits achieved by the LME Trading Team over recent years.
In order to satisfy the cash consideration in respect of the Acquisition, and to
provide working capital for the Enlarged Group, W.H. Ireland has conditionally
placed 144,000,000 new Ordinary Shares with institutional investors at 12.5
pence per share. The Placing, which is discussed further below, is expected to
raise #18 million gross (approximately #15.2 million net of expenses).
As the proposed acquisition of the Brokerage was of a size that would have
constituted a reverse takeover under the AIM Rules, dealings in the Existing
Ordinary Shares were suspended, at the Board's request, on 12 July 2005 at a
mid-market price of 12.25 pence per share. This suspension has now been lifted
following the publication today of the Admission Document.
In view of its size, the Acquisition constitutes a reverse takeover under the
AIM Rules, and is conditional, inter alia, upon the approval of Shareholders at
an extraordinary general meeting. If the Resolutions are duly passed at the EGM,
the Company's existing trading facility on AIM will be cancelled and the Company
will apply for the Enlarged Share Capital to be admitted and re-admitted (as the
case may be) to trading on AIM. An irrevocable undertaking to vote in favour of
the Resolutions has been received from Corvus in respect of 78,500,000 Ordinary
Shares representing approximately 76.07 per cent. of the Company's existing
ordinary share capital.
Graham Butt, who is the Non-Executive Chairman of the Company, is deemed to be
interested in the Acquisition by reason of his position as trust officer and
shareholder of Rampart Management Inc, a company associated with Graham Porter.
Accordingly, Mr Butt has not participated in the Board's deliberations with
regard to the Acquisition.
Shareholders should note that the Proposals are inter-conditional. It is
expected that Admission will take place and dealings in the Enlarged Share
Capital will commence on 25 April 2006.
If the Placing does not proceed, Commoditrade would need to seek alternative
methods of financing in order to meet the expenses of the Proposals and its
ongoing working capital requirements. Shareholders should note that if the
Placing does not proceed and the Company is unable to procure alternative
sources of funding, the Company would not be able to continue to trade.
2. THE COMPANY AND ITS INVESTMENT STRATEGY
Commoditrade was incorporated on 6 January 2005 in the Cayman Islands and its
shares were admitted to trading on AIM as an investment company on 8 March 2005
when it raised #515,000 before expenses, by way of a placing at 5 pence per
share. The Company was established with the primary objective of building,
through investment and acquisition, a group specialising in the commodities
sector.
The Board believed then, and it remains their belief now, that increased
investor interest in the commodities sector, driven in large part by the high
investment returns achieved in certain areas of the metals market has resulted
in a climate which is favourable for making investments in or acquiring
companies engaged in the brokerage of commodities and derivatives.
Following completion of the Proposals, the Company will continue to be an
investment company under the AIM Rules, the strategy for which is set out in
detail below.
The Enlarged Board intends to invest in (either by way of minority or majority
investment, joint venture or other partnership arrangements) or acquire
companies (private or public) predominantly located in Europe which would have
some or all of the following characteristics:
* entities which are involved in the brokerage or trading of commodities;
* entities whose trading strategy or operations complement the strategy and
business of the Commoditrade Group, for example where there is an opportunity
to share administrative functions or cross-sell products;
* fund vehicles with investment products, which offer investors exposure to
commodities markets;
* entities which either offer or have potential to develop trading operations or
investment products within or that complement commodity markets; and
* entities developing opportunities to either trade new commodity products or to
develop new methods or markets to trade commodities.
Accordingly, the objective of the Company continues to be the creation of a
group combining commodities expertise with complementary trading areas while at
the same time, as required, building a back office infrastructure capable of
supporting further growth whether by acquisition or organic development of
market opportunities.
The net proceeds of the Placing will enable the Enlarged Group to investigate
potential Transactions in the pursuit of its strategy and to provide working
capital for the Enlarged Group. As a company whose shares are traded on AIM, the
Enlarged Board will consider effecting transactions using the Company's shares
(in whole or in part) as consideration.
The Company's investment strategy is intended to be long-term. If, however,
circumstances arise whereby an acquired business or company may be disposed of
at a suitable premium, such possibilities will be considered at the relevant
time. The Company intends to undertake up to 5 Transactions in the 24 month
period following Admission, depending, amongst other matters, on the performance
of businesses which have been acquired or in which the Company has made an
investment. The Enlarged Board's preference will be to acquire 100 per cent. of
potential Target Companies to obtain the full benefit of their growth prospects.
However, equity interests of less than 100 per cent. may be considered by the
Enlarged Board if the circumstances or opportunities merit consideration. In the
majority of cases, the Enlarged Board's intention will be that the Company will
be an active investor and will have a representative on the board of directors
of Target Companies.
Prior to any Transaction an appropriate due diligence exercise will be
undertaken. This due diligence process will be tailored according to individual
Target Companies, but would normally be expected as a minimum to include the
production of a legal due diligence report prepared by the Company's legal
advisers and a financial due diligence report prepared by the Company's
accountants.
Before any final investment decision is made, the Transaction and its related
terms must be approved by the Enlarged Board. The Enlarged Board's intention
will be to meet on a regular basis to discuss and monitor the status of the
Company's current and potential Transactions.
The Directors intend that if the Company has not completed a Transaction within
36 months from Admission, they will convene an extraordinary general meeting at
which proposals will be put to Shareholders to liquidate the assets of the
Company and distribute the proceeds amongst Shareholders.
3. INFORMATION ON TAMBELAN, THE TAMBELAN AGREEMENT AND THE ACQUISITION
Tambelan was founded in 1994 by Graham Porter as an investment vehicle, one of
the principal activities of which has been to be a metals trading business. In
January 2001 Tambelan entered into an agreement with the Brokerage (which was
amended in February 2002 and again in January 2004) pursuant to which Tambelan
introduced the LME Trading Team to the Brokerage and agreed to underwrite losses
generated by the LME Trading Team in consideration for Tambelan receiving 75 per
cent. of the trading profits (after certain expenses) attributable to that team.
Summary of Financial Information
A financial summary of the profits attributable to the Tambelan Agreement for
the three years ended 31 December 2005 is set out below:
Year ended Year ended Year ended
31 December 31 December 31 December
2003 2004 2005
#'000 #'000 #'000
Revenue 3,508 8,010 10,633
Gross profit
attributable to the
Tambelan Agreement 1,840 5,072 7,117
Notes:
1. Revenue comprises 75 per cent. of the trading profits earned by the LME
Trading Team.
2. Gross profit attributable to the Tambelan Agreement comprises revenue less 75
per cent. of the direct costs of the LME Trading Team and 100 per cent. of
bonuses paid to the LME Trading Team.
3. The gross profit attributable to the Tambelan Agreement set out above
includes the following amounts relating to differences arising from foreign
exchange translations which have not been verified by Lee & Allen Consulting
Limited: (2003: loss #170,600; 2004: loss #131,600; 2005: gain #136,800).
The financial information above has not been audited and has been extracted from
the accounts of Tambelan and reviewed by Lee & Allen Consulting Limited.
LME trading
The Brokerage is one of 11 category one members of the LME and the LME Trading
Team makes markets in base metals in the ring as well as via telephone trading.
It also trades on the LME's electronic trading platform. The LME Trading Team
generates income by acting as a market-maker, buying and selling the metals
traded on the exchange and also dealing as principal trader taking positions
subject to pre-set "caps and collars". Metals traded by the LME Trading Team on
the LME are copper, aluminium, nickel, zinc, lead and tin; with copper, gold and
silver also being traded on New York's Commodity Exchange Inc.
Trends in trading
Pursuant to the Tambelan Agreement a proportion of the Brokerage's LME trading
profits are paid to Tambelan. Trading income is driven by market forces and may
therefore be volatile on a daily basis. Since 2003 volatility in commodity
prices has resulted in an increase in trading profits generated by the LME
Trading Team.
The market
Commodity prices are a function of the relationship between supply, demand and
speculative trading activity. Significant growth in trading activity of
commodity futures and options has been experienced over recent years driven by
relatively high commodity price volatility and rising base metal prices
resulting from increased demand from developing countries, and in particular
China. This in turn has led to an increase in speculative investments being made
by financial investors such as pension funds and hedge funds, which have become
key participants in the commodity market since 2001.
Since 2001, prices for the two most traded metals on the LME, aluminium and
copper, have been high, driven by insufficient supply over the period. These
fundamentals appear to support strong trading going forward, although an
increase in supply is expected to result in some price correction in the short
to medium term. Such a price correction should see the return to the market of
certain participants, who were driven out by the high prices, which may support
increased trading activity. The Directors and Proposed Directors believe that
the demand for metals is expected to remain strong in the short-term as
developing countries continue to experience growth and also as growth returns to
the leading industrial economies in the world.
Competitive environment
The Brokerage faces a broad range of competitors which differ significantly by
activity. The Directors believe that competitors to the Brokerage in LME trading
are the other 10 category one members of the LME.
The LME Trading Team derives competitive advantage from its reputation within
the commodity market, the expertise and in-depth market knowledge of its members
and strong long-standing relationships with its customer base. The Directors
believe that there are considerable barriers to entry for new potential
competitors arising from the regulatory environment, the requirement for
regulatory capital and the restriction on the number of trading seats available.
LME Trading Team
In addition to Christopher Adams (Head of LME trading), whose details are set
out in paragraph 5 below, summary details of the key members of the LME Trading
Team are set out below:
Christian Daniel Saunders (aged 31, Commodity Trader)
Christian joined the LME Trading Team in 2000 and currently acts as an aluminium
trader. Prior to joining the Brokerage, Christian worked in sales at Cargill
Investor Services Limited and as a trader at Billiton Metals Limited, having
started his career at the LME.
Dean Carr (aged 28, Commodity Trader)
Dean joined the LME Trading Team in 2001 and trades all base metals and options.
Dean has worked as a trader since 1998, when he commenced trading aluminium at
Triland Metals Limited which he joined in 1996.
Tambelan Agreement
Under the terms of the Tambelan Agreement, either party can terminate the
arrangement with 3 months' notice. If the Tambelan Agreement were to be
terminated following completion of the Proposals, this could have a material
adverse effect on the business and operations of the Company in that no further
income would be received from the Brokerage following expiry of the 3 months'
notice period. Subject to agreeing definitive documentation, the parent company
of the Brokerage has agreed that the Tambelan Agreement will be amended so as to
be terminable by either party on the giving of 12 months' notice (such notice
not to be given before the first anniversary of Admission).
In addition, the business of Commoditrade could be adversely affected if any of
the members of the LME Trading Team were to leave the employment of the
Brokerage and cease to be subject to the provisions of the Tambelan Agreement.
The Directors have obtained an assurance from the key members of the LME Trading
Team such that if the Tambelan Agreement were to be terminated by the Brokerage,
those key members of the LME Trading Team would accept an offer of employment
from Commoditrade provided that the terms of such employment were at least
equivalent to their existing terms with the Brokerage.
If the Tambelan Agreement is terminated, the Enlarged Board would seek to
replicate that arrangement with another LME ring member or seek to invest in or
acquire another brokerage in order to provide a suitable alternative trading
infrastructure for the LME Trading Team.
Graham Porter is the sole shareholder of Tambelan and is also the Executive
Chairman of Corvus, which in turn holds 76.07 per cent. of the entire issued
share capital of Commoditrade. Accordingly, the Acquisition is classified as a
related party transaction under the AIM Rules. The Directors (other than Graham
Butt who is not deemed to be independent for the purposes of the Acquisition)
consider, having consulted with Strand Partners, that the terms of the
Acquisition Agreement are fair and reasonable in so far as the Shareholders are
concerned. In providing its advice to the Independent Directors, Strand Partners
has taken into account the Independent Directors' commercial assessments of the
Acquisition.
4. CURRENT TRADING AND PROSPECTS OF THE ENLARGED GROUP
Since its incorporation in March 2005, the Company's only significant activity
has been to obtain admission to trading on AIM and to raise #515,000 before
expenses through the Original Placing. Save for entering into certain material
contracts the Company has not traded since incorporation.
The Company today announced its audited results for the period ended 31 December
2005.
The Enlarged Board is committed to continuing the investment strategy set out in
the Company's AIM admission document dated 8 March 2005, which was to create a
group that combines commodities expertise with complementary trading areas
whilst at the same time consolidating back-office systems and reducing brokerage
and commission payments made outside the group. The Enlarged Board is optimistic
as to the Enlarged Group's prospects based on the combination of a continuation
of the Company's investment strategy, the Acquisition, the Placing and its
expectations for further growth in profits which they hope are able to be
achieved by the LME Trading Team.
Since the period ended 31 December 2005 the trading results of the LME Trading
Team have been ahead of the Directors' and Proposed Directors' expectations.
5. DIRECTORS AND PROPOSED DIRECTORS
Directors
With effect from Completion, it is proposed that Terrence Bartlett will resign
as a director of the Company and that Graham Butt will become Executive
Chairman. In addition at Completion, Christopher Adams and Geoffrey
Conway-Henderson will be appointed as Non-Executive Directors. Immediately
following Completion, the Enlarged Board will comprise:
Graham Mark Butt (aged 44, Executive Chairman)
Graham is currently a director of Fulcrum Administration LLC, and a member of
the society of estate and trust practitioners. For over 20 years, Graham acted
as an administrator, trustee and director of The Castle Trust Co. Limited group
of companies, during which time he actively invested in structured funds and
hedge funds to maximise returns for high net worth clients. Graham is currently
a director of two AIM traded companies: Raven Capital Inc. and Corvus.
Joanna Rebecca Barrett (aged 39, Non-Executive Director)
Joanna has over 21 years' experience in the finance industry, both in the money
markets and metal exchanges. For the last 8 years Joanna has worked in the
offshore financial services industry specialising in the establishment and
running of trust and fiduciary structures. This role involves acting on behalf
of high net worth clients in both equity and structured finance investments.
Joanna is currently a director of the AIM traded companies Raven Capital Inc.,
Gable Holdings Inc. and Corvus.
Proposed Directors
Christopher Paul Adams (aged 37, Non-Executive Director)
Chris is the head LME trader at the Brokerage. He rejoined the Brokerage in 2001
having worked at the Brokerage from 1994 to 1999. Chris has spent the last 19
years in the commodities industry, having held numerous positions at commodity
trading houses including Billiton Enthoven Metals Limited. As well as trading
for 15 years, he has held managerial positions for 10 years. Prior to rejoining
the Brokerage, Chris held positions at Credit Lyonnais Rouse and AIG
International.
Geoffrey David Conway-Henderson (aged 59, Non-Executive Director)
Geoffrey has over 35 years experience in the finance industry, having worked in
the money markets as a broker, dealing primarily in derivatives, interest rate
swaps and options. From 1973 until 1987 he was Managing Director at Harlow Meyer
& Co. Following this he left to become a director of Intercapital Brokers
Limited, a subsidiary of Intercapital PLC, one of the world's largest
interdealer brokers, until his retirement in October 2003. Geoffrey is currently
a director of Corvus.
6. PRINCIPAL TERMS OF THE ACQUISITION
Under the terms of the Acquisition Agreement, the Company has conditionally
agreed to acquire the Tambelan Interest, for a consideration comprising the
issue of the Consideration Shares, the payment of #14 million in cash and,
subject to the achievement of certain performance criteria, the issue of the
Deferred Consideration Shares. The Acquisition Agreement is conditional on (i)
the passing of the Resolutions and (ii) the Placing Agreement becoming
unconditional and not having been terminated in accordance with its terms prior
to completion of the Proposals.
7. DETAILS OF THE PLACING AND THE INITIAL COMMITMENT
The Company is proposing to issue 144,000,000 Placing Shares pursuant to the
Placing at the Placing Price to raise approximately #15.2 million (net of
expenses). The Placing Shares will represent approximately 38.79 per cent. of
the Enlarged Share Capital, will be fully paid upon issue and will rank pari
passu in all respects with the Existing Ordinary Shares, the Consideration
Shares, the Bonus Shares, the Fee Shares and the Brokerage Shares.
The Company, the Directors, the Proposed Directors and Graham Porter have
entered into the Placing Agreement with Strand Partners and W.H. Ireland. The
Placing is not being underwritten. The Placing Shares have been conditionally
placed with institutions and other investors. The Placing is conditional upon,
inter alia, the Placing Agreement becoming effective on 25 April 2006 (or such
later time and date as the Company, Strand Partners and W.H. Ireland may agree
being not later than 16 May 2006).
Initial Commitment
At the time of the Company's admission to trading on AIM on 8 March 2005,
Shareholders who subscribed at 5p per Ordinary Share under the Original Placing
also committed to subscribe for an aggregate of 3,433,333 further Ordinary
Shares at a price of 15p per share, conditional upon the completion of the
acquisition by the Company of a Target Company.
Whilst the Acquisition relates to revenues derived from a commodity trading
business, it is not strictly in line with the Company's stated investment
strategy and accordingly the obligation to subscribe for additional shares under
the Initial Commitment will not be exercised at this time. The obligation to
subscribe for shares under the Initial Commitment will continue until such time
as the Company does complete the acquisition of its first Target Company.
8. PROPOSED SHARE ISSUES
Bonus Shares
On completion of the Proposals, Christopher Adams will receive 12,000,000 Bonus
Shares and each of Dean Carr and Christian Saunders will receive 2,000,000 Bonus
Shares as part of the Board's strategy to align their and the Company's
interests. The Bonus Shares will be subject to the lock-in arrangements
described further in paragraph 9 below.
Fee Shares
Also on Completion, Alex Chapman and Brian Thomlinson will receive 2,600,000 and
800,000 Fee Shares respectively in consideration of introducing potential equity
investors to the Company; Access Capital Limited will receive 800,000 Fee Shares
in consideration of the provision of financial structuring services to the
Company; Graham Butt and Geoffrey Conway-Henderson will receive 3,000,000 and
1,300,000 Fee Shares respectively; and Strand Partners will receive 800,000 Fee
Shares as part of its fee arrangements with the Company.
All of the Fee Shares (other than those to be issued to Brian Thomlinson and
Strand Partners) are to be subject to the lock-in arrangements, further details
of which are set out in paragraph 9 below.
Brokerage Shares
In consideration of the parent company of the Brokerage agreeing to the
Proposals, in so far as they are applicable to it, Commoditrade proposes to
issue 15,350,000 new Ordinary Shares to it.
9. LOCK-IN AGREEMENTS AND ORDERLY MARKET ARRANGEMENTS
Each of the Directors (other than Terrence Bartlett), Geoffrey Conway-Henderson,
the Vendor and Corvus (in relation to 25 per cent. of its holding of Ordinary
Shares) have entered into an agreement not to dispose of any interests in the
securities of the Company set out in such agreement ("Lock-in Agreements")
within the 12 month period following Admission. In addition, such Shareholders
have also agreed not to dispose of any interests in those same securities of the
Company in the 12 month period from the anniversary of the date of Admission
unless such disposals are made through W.H. Ireland (or the Company's broker
from time to time) (the arrangements save for the time period being collectively
referred to as "Orderly Market Arrangements").
Christopher Adams, Dean Carr and Christian Saunders have each agreed to enter
into Lock-in Agreements for a period of 24 months from Admission, save in
certain limited circumstances.
Each of Corvus (in relation to 75 per cent. of its holding of Ordinary Shares),
Kinetic Limited (a party related to Tambelan), Alex Chapman and Access Capital
Limited have agreed to enter into Orderly Market Arrangements for a period of 24
months from Admission.
10. DIVIDEND POLICY
The Company has not paid a dividend since incorporation.
The Directors and Proposed Directors expect that, in the short term, the
anticipated revenues generated by the Tambelan Agreement will be retained by the
Enlarged Group for the development and growth of the Enlarged Group. The
Directors and Proposed Directors will review the dividend policy in light of the
revenues received pursuant to the Tambelan Agreement.
The declaration and payment by the Company of dividends will be dependent upon
the Company's financial condition, future prospects and other factors deemed to
be relevant at the time. This will take into account both the requirements of
the business and the expectations of the Shareholders.
11. IRREVOCABLE UNDERTAKING FROM CORVUS
Corvus, which holds in aggregate 78,500,000 Ordinary Shares, representing
approximately 76.07 per cent. of the existing ordinary share capital, has
irrevocably undertaken to vote in favour of the Proposals.
12. SETTLEMENT, DEALINGS AND CREST
CREST is a paperless settlement procedure enabling securities to be evidenced
otherwise than by a certificate and transferred otherwise than by written
instrument. CRESTCo Limited is unable to take responsibility for the electronic
settlement of shares issued by non-UK companies.
Depositary Interests allow paper stock to be dematerialised and settled
electronically. The paper based stock is transferred to a nominee company under
the control of the Depositary. The Depositary then issues the Depositary
Interests to the individual shareholder's CREST account on a one-for-one basis
and provides the necessary custodial service. The Depositary Interests can then
be traded and settlement will be within the CREST system in the same way as
other CREST stock.
To give Shareholders the choice of whether they want to hold their Ordinary
Shares in certificated or uncertificated form, the Company has chosen to adopt
the Depositary Interests facility operated by its UK Registrar.
Shareholders who elect to hold their Ordinary Shares in uncertificated form
through the Depositary Interests facility will be bound by the terms of the Deed
Poll.
The Company's share register will show the nominee company, Capita IRG Trustees
(Nominees) Limited, as the holder of the Ordinary Shares but the beneficial
interest will remain with the Shareholder who continues to benefit from all of
the rights attaching to the Ordinary Shares as it would have if it had been on
the register itself. The Depositary Interests will be traded and settled via the
CREST system. Shareholders can withdraw their Ordinary Shares back into
certificated form at any time using standard CREST messages.
Conversion into, and transfers of, Depositary Interests are subject to stamp
duty or stamp duty reserve tax, as appropriate, in the normal way.
Accordingly, settlement of transactions in the Ordinary Shares following
Admission may take place within the CREST system if Shareholders so wish. CREST
is a voluntary system and holders of Ordinary Shares who wish to receive and
retain share certificates will be able to do so.
13. EXTRAORDINARY GENERAL MEETING
In order to give effect to the Acquisition and to approve other elements of the
Proposals, an extraordinary general meeting of the Company will be convened. As
the Acquisition constitutes a reverse takeover, Shareholder approval will be
required under the AIM Rules.
14. ADMISSION DOCUMENT
The Admission Document setting out details of the Proposals and including a
notice of the EGM, accompanied by a form of proxy (or form of direction as
applicable), will be posted to Shareholders today.
Copies of the Admission Document will be available to the public free of charge
from today at the offices of SJ Berwin LLP, 10 Queen Street Place, London
EC4R 1BE and at the offices of Strand Partners Limited at 26 Mount Row, London
W1K 3SQ during normal business hours on any weekday (other than Saturdays and
public holidays), until one month following the date of Admission.
Expected Timetable of Principal Events
2006
Admission Document publication date 6 April
11.00 a.m.(CET)
Latest time and date for receipt of forms of direction on 22 April
11.00 a.m.(CET)
Latest time and date for receipt of forms of proxy on 22 April
11.00 a.m.(CET)
Extraordinary General Meeting on 24 April
Completion of the Acquisition 25 April
Admission effective and dealings in the Enlarged Share Capital
expected to commence on AIM 8.00 a.m. on 25 April
Expected date for CREST accounts to be credited in respect of
Depositary Interests 25 April
Expected date for posting of the share certificates for the
New Ordinary Shares (where applicable) 2 May
Acquisition and Placing Statistics
Number of Existing Ordinary Shares prior to completion of the
Proposals 103,200,000
Placing Price 12.5 pence
Number of Placing Shares being issued under the Placing 144,000,000
Number of Consideration Shares being issued pursuant to the
Acquisition 83,423,114
Number of Bonus Shares being issued 16,000,000
Number of Fee Shares being issued 9,300,000
Number of Brokerage Shares being issued 15,350,000
Number of Ordinary Shares in issue immediately following
Admission 371,273,114
Number of Deferred Consideration Shares (if issued) 6,000,000
Percentage of the Enlarged Share Capital of the Company 38.79 per cent.
represented by the Placing Shares*
Percentage of the Fully Diluted Share Capital represented by the 37.80 per cent.
Placing Shares*
Percentage of the Enlarged Share Capital of the Company held by 5.28 per cent.
the Directors and Proposed Directors
Gross proceeds of the Placing #18 million
Estimated net proceeds of the Placing #15.2 million
Market capitalisation at the Placing Price #46.4 million
* The Acquisition and Placing Statistics above exclude the issue of the Deferred
Consideration Shares
The Placing is not being made, directly or indirectly, in or into the United
States, Canada, Japan, Australia, Republic of Ireland, Republic of South Africa
or any other jurisdiction in which such Placing or solicitation is unlawful.
Accordingly, this announcement is not being and should not be released or
otherwise distributed or sent in, into or from the United States, Canada, Japan,
Australia, Republic of Ireland, Republic of South Africa, or any other
jurisdiction where to do so would be in breach of any applicable law and/or
regulation. The new Ordinary Shares to be allotted pursuant to the Acquisition
and the Placing have not been and will not be registered under the Securities
Act or under the relevant securities laws of any state or other jurisdiction of
the United States, Canada, Japan, Australia, Republic of Ireland or Republic of
South Africa. Accordingly, the new Ordinary Shares to be allotted pursuant to
the Acquisition and the Placing may not (unless an exemption under the
Securities Act or other relevant securities laws is available) be offered, sold,
re-sold or delivered, directly or indirectly, in, into or from the United
States, Canada, Japan, Australia, Republic of Ireland, Republic of South Africa
or any other jurisdiction where this would constitute a violation of the
relevant laws of, or require registration thereof in, such a jurisdiction or to,
or for the account or benefit of, any US persons or a person in, or resident of
Canada, Japan, Australia, Republic of Ireland or Republic of South Africa.
Strand Partners Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting as nominated adviser to the
Company in connection with the proposed admission of the Enlarged Share Capital
to trading on AIM. Its responsibilities as the Company's nominated adviser under
the AIM Rules are owed solely to the London Stock Exchange and are not owed to
the Company or to any Director or to any other person in respect of his decision
to acquire shares in the Company in reliance on any part of this announcement.
W.H. Ireland Limited, which is authorised and regulated in the United Kingdom by
the Financial Services Authority and is a member of the London Stock Exchange,
is acting as broker to the Company in connection with the Placing and proposed
admission of the Enlarged Share Capital to trading on AIM. Strand Partners
Limited and W. H. Ireland Limited are not acting for anyone else and will not be
responsible to anyone other than the Company for providing the protections
afforded to their clients or for providing advice in relation to the contents of
this announcement or the Placing or the Admission of the Enlarged Share Capital
to trading on AIM. No representation or warranty, express or implied, is made by
either Strand Partners Limited or W. H. Ireland Limited as to the contents of
this announcement, without limiting the statutory rights of any person to whom
this announcement is issued. Neither Strand Partners Limited nor W. H. Ireland
Limited will be offering advice, nor will they otherwise be responsible for
providing customer protections to recipients of this announcement or for
advising them on the contents of this announcement or any other matter. The
information contained in this announcement is not intended to inform or be
relied upon by any subsequent purchasers of Ordinary Shares (whether on or off
exchange) and accordingly no duty of care is accepted in relation to them.
Definitions
The following definitions apply throughout this announcement, unless the context
requires otherwise:
+-----------------+------------------------------------------------------------+
|"Acquisition" |the proposed acquisition by Commoditrade of the Tambelan |
| |Interest; |
+-----------------+------------------------------------------------------------+
|"Acquisition |the agreement dated on or around 5 April 2006 pursuant to |
|Agreement" |which Commoditrade has conditionally agreed to acquire the |
| |Tambelan Interest; |
+-----------------+------------------------------------------------------------+
|"Act" |the Companies Act 1985 (as amended); |
+-----------------+------------------------------------------------------------+
|"Admission" |the admission or re-admission (as the case may be) of the |
| |Enlarged Share Capital to trading on AIM and such admission |
| |of re-admission becoming effective in accordance with the |
| |AIM Rules; |
+-----------------+------------------------------------------------------------+
|"Admission |the admission document compiled in accordance with the |
|Document" |Regulations and the AIM Rules; |
+-----------------+------------------------------------------------------------+
|"AIM" |the AIM market of the London Stock Exchange; |
+-----------------+------------------------------------------------------------+
|"AIM Rules" |the rules applicable to AIM as published by the London Stock|
| |Exchange from time to time; |
+-----------------+------------------------------------------------------------+
|"Board" or |the current directors of the Company; |
|"Directors" | |
+-----------------+------------------------------------------------------------+
|"Bonus Shares" |the 16,000,000 Ordinary Shares proposed to be issued to |
| |certain members of the LME Trading Team with effect from |
| |Admission; |
+-----------------+------------------------------------------------------------+
|"Brokerage" |Sucden (UK) Limited, a UK based company, regulated by the |
| |FSA and engaged in the brokerage of commodities and |
| |derivatives; |
+-----------------+------------------------------------------------------------+
|"Brokerage |the 15,350,000 new Ordinary Shares proposed to be allotted |
|Shares" |and issued by Commoditrade to the parent company of the |
| |Brokerage in connection with the Proposals; |
+-----------------+------------------------------------------------------------+
|"Commoditrade |Commoditrade and Commoditrade Limited; |
|Group" | |
+-----------------+------------------------------------------------------------+
|"Company" or |Commoditrade Inc., a company incorporated in the Cayman |
|"Commoditrade" |Islands with registered number 143629; |
+-----------------+------------------------------------------------------------+
|"Completion" |completion of the Proposals; |
+-----------------+------------------------------------------------------------+
|"Consideration" |the allotment and issue of the Consideration Shares and the |
| |Deferred Consideration Shares (if any) and payment of cash |
| |of #14 million; |
+-----------------+------------------------------------------------------------+
|"Consideration |the 83,423,114 new Ordinary Shares proposed to be allotted |
|Shares" |and issued by Commoditrade to Tambelan (or such persons as |
| |it may direct) pursuant to the Acquisition Agreement; |
+-----------------+------------------------------------------------------------+
|"Corvus" |Corvus Capital Inc., a company incorporated in the British |
| |Virgin Islands with registration number 367829 whose |
| |registered office is at Palm Chambers, PO Box 119, Road |
| |Town, Tortola, British Virgin Islands; |
+-----------------+------------------------------------------------------------+
|"CREST" |the computerised settlement system to facilitate the |
| |transfer of title to or interests in securities in |
| |uncertificated form, operated by CRESTCo Limited; |
+-----------------+------------------------------------------------------------+
|"Deed Poll" |the deed poll dated 22 February 2005 made by Capita IRG |
| |Trustees Limited dealing with the creation and issue of |
| |Depositary Interests in respect of the Company; |
+-----------------+------------------------------------------------------------+
|"Deferred |the 6,000,000 new Ordinary Shares proposed to be allotted |
|Consideration |and issued by Commoditrade to Tambelan (or to such persons |
|Shares" |as it may direct) pursuant to the Acquisition Agreement in |
| |the event that the net profit attributable (before the |
| |payment of bonuses to the LME Trading Team) under the |
| |Tambelan Agreement is greater than #9 million for the 12 |
| |month period following Admission; |
+-----------------+------------------------------------------------------------+
|"Depositary" |Capita Registrars acting as depository through its |
| |authorised and regulated associate company Capita IRG |
| |Trustees Limited; |
+-----------------+------------------------------------------------------------+
|"Depositary |interests in uncertificated form, representing Ordinary |
|Interests" |Shares, that can be settled through and held in CREST; |
+-----------------+------------------------------------------------------------+
|"EGM" or |the extraordinary general meeting of the Company to be held |
|"Extraordinary |at 30 Quai Gustave-Ador, 1207 Geneva, Switzerland at 11.00 |
|General |a.m. (CET) on 24 April 2006; |
|Meeting" | |
+-----------------+------------------------------------------------------------+
|"Enlarged |the Commoditrade Group, as enlarged by the Acquisition; |
|Group" | |
+-----------------+------------------------------------------------------------+
|"Enlarged |the Directors (save for Terrence John Bartlett) and the |
|Board" |Proposed Directors; |
+-----------------+------------------------------------------------------------+
|"Enlarged Share |the issued ordinary share capital of Commoditrade as |
|Capital" |enlarged by the issue of the New Ordinary Shares; |
+-----------------+------------------------------------------------------------+
|"Existing |the 103,200,000 Ordinary Shares in issue at the date of this|
|Ordinary |announcement; |
|Shares" | |
+-----------------+------------------------------------------------------------+
|"Fee Shares" |the 9,300,000 new Ordinary Shares proposed to be allotted |
| |and issued by Commoditrade in connection with services |
| |provided in relation to the Proposals; |
+-----------------+------------------------------------------------------------+
|"FSA" |the Financial Services Authority; |
+-----------------+------------------------------------------------------------+
|"Fully Diluted |the Enlarged Share Capital together with such Ordinary |
|Share Capital" |Shares as would be in issue assuming the issue of the |
| |Deferred Consideration Shares and full exercise of all |
| |outstanding warrants and options granted by the Company; |
+-----------------+------------------------------------------------------------+
|"IFRS" |International Financial Reporting Standards; |
+-----------------+------------------------------------------------------------+
|"Independent |Terrence Bartlett and Joanna Barrett; |
|Directors" | |
+-----------------+------------------------------------------------------------+
|"Initial |the commitment made at the time of the Original Placing |
|Commitment" |pursuant to which the Company is able, in certain |
| |circumstances, to require certain persons to subscribe for |
| |additional Ordinary Shares; |
+-----------------+------------------------------------------------------------+
|"LME" |the London Metals Exchange; |
+-----------------+------------------------------------------------------------+
|"LME Trading |the members from time to time of the LME trading team of the|
|Team" |Brokerage who are set out in the Tambelan Agreement; |
+-----------------+------------------------------------------------------------+
|"London Stock |London Stock Exchange plc; |
|Exchange" | |
+-----------------+------------------------------------------------------------+
|"New Ordinary |the Consideration Shares, the Commitment Shares, the Placing|
|Shares" |Shares, the Bonus Shares, the Fee Shares and the Brokerage |
| |Shares; |
+-----------------+------------------------------------------------------------+
|"Option" |the option granted to Commoditrade by Tambelan on 16 January|
| |2006 for Commoditrade to acquire the Tambelan Interest; |
+-----------------+------------------------------------------------------------+
|"Ordinary |ordinary shares of 0.1 pence each in the capital of the |
|Shares" |Company; |
+-----------------+------------------------------------------------------------+
|"Original |the placing of 10,300,000 Ordinary Shares at a placing price|
|Placing" |of 5 pence per share which was effected at the time of the |
| |Company's admission to AIM on 8 March 2005; |
+-----------------+------------------------------------------------------------+
|"Placees" |subscribers for Placing Shares; |
+-----------------+------------------------------------------------------------+
|"Placing" |the proposed placing of the Placing Shares at the Placing |
| |Price pursuant to the Placing Agreement; |
+-----------------+------------------------------------------------------------+
|"Placing |the conditional agreement between W.H. Ireland, Strand |
|Agreement" |Partners, the Directors, the Proposed Directors, Graham |
| |Porter and the Company; |
+-----------------+------------------------------------------------------------+
|"Placing Price" |12.5 pence per Placing Share; |
+-----------------+------------------------------------------------------------+
|"Placing |the 144,000,000 new Ordinary Shares which are the subject of|
|Shares" |the Placing; |
+-----------------+------------------------------------------------------------+
|"Proposals" |together the Acquisition, the Placing, and Admission; |
+-----------------+------------------------------------------------------------+
|"Proposed |Christopher Adams and Geoffrey Conway-Henderson; |
|Directors" | |
+-----------------+------------------------------------------------------------+
|"Resolutions" |the resolutions to be proposed at the EGM and reference to a|
| |"Resolution" shall be construed accordingly; |
+-----------------+------------------------------------------------------------+
|"Shareholders" or|holders of issued Ordinary Shares; |
|"Members" | |
+-----------------+------------------------------------------------------------+
|"Strand |Strand Partners Limited, the Company's nominated adviser; |
|Partners" | |
+-----------------+------------------------------------------------------------+
|"Tambelan" |Tambelan Company Limited, a company incorporated in the |
| |British Virgin Islands with registered number 104629; |
+-----------------+------------------------------------------------------------+
|"Tambelan |a profit sharing agreement made between Tambelan and the |
|Agreement" |Brokerage and dated on or around January 2001 (as amended in|
| |February 2002 and again in January 2004); |
+-----------------+------------------------------------------------------------+
|"Tambelan |Tambelan's interest under the Tambelan Agreement; |
|Interest" | |
+-----------------+------------------------------------------------------------+
|"Target Company" |entities including, but not limited to, companies, |
|or "Target |partnerships and limited liability partnerships whose |
|Companies" |characteristics match the Company's investment strategy as |
| |set out in this announcement; |
+-----------------+------------------------------------------------------------+
|"Transaction" or |investments in or the acquisition of an interest in a Target|
|"Transactions" |Company; |
+-----------------+------------------------------------------------------------+
|"UK" or United |the United Kingdom of Great Britain and Northern Ireland; |
|Kingdom" | |
+-----------------+------------------------------------------------------------+
|"Vendor" |Tambelan, a company wholly owned by Graham Porter; |
+-----------------+------------------------------------------------------------+
|"W.H. Ireland" |W.H. Ireland Limited, the Company's broker. |
+-----------------+------------------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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